You can read the piece here.

Andrew also has a spot-on post on the over-used term “Trusted Advisor”.

If a job’s worth doing, it’s worth doing well.  So if a sales pipeline is worth having, how do you know if it’s working well?  Welcome to the world of sales pipeline measurement.

In industries with dedicated business to business sales forces, for example software or capital equipment, sales pipeline measurement is serious business!  Management is focused on measuring progress towards revenue targets, particularly when there are quarterly earnings expectations to be met, and sales professionals are focused on hitting their targets to achieve sales commission levels and bonuses.

Management and sales stars have learned that sales success results from discipline, focus and measurement throughout the sales process.  CPA firms can learn a lot from the hard-won insights that other sectors have applied to the measurement and management of their sales pipelines.

Here are five key elements of sales pipeline measurement that should set you on the path to sales success.

1.    Determine your measures:

The first step is to decide what to measure.  There is no single definitive or perfect set of measures. Businesses typically use a range of measures.  Here are a number of commonly used measures that you should consider:

These measures can be calculated and reported at the firm level, practice level, office level, individual partner level or any other level that makes sense for your firm.

2.    Set Targets

Once you have measures, you need to set targets. How big do you want (or need!) your pipeline to be?  Think about how these measures inter-relate.  If your revenue target is $10m and your conversion rate is 10% (hopefully not!) you would need $100m in new opportunities.  Do you want to set a pipeline value target of $100m or instead set a pipeline value target of $20m and a conversion rate target of 50% to achieve your $10m revenue goal?  And how do you want to achieve that $10m - 10 x $1m projects or 100 x $100k projects?

3.    Gather the Data

One of the often learned lessons of any kind of performance measurement is that it’s a lot easier to decide on the measure than it is to actually measure it.  In CPA firms the challenge is often getting the partners to provide information on the opportunities they have and hence to be able to measure the sales pipeline.  Here’s one technique that regularly works to get the data coming in.  Publish the metrics based on whatever data you have and when someone points out the numbers are wrong or missing enlist their help in getting you the right data.

4.    Report the Metrics

There’s no point in defining measures, setting targets and gathering the data if it doesn’t get reported.  Here’s a checklist for reporting your sales metrics:

• Determine who should receive sales metric information - and whether different people should receive different information
• Determine how often they should get it.  Monthly? Weekly? Daily?
• Determine how they should receive it.  Delivered to their e-mail (and perhaps not looked at) or presented at a weekly sales pipeline meeting?
• Determine the sales metrics report format.  The simpler and clearer the information the more likely people will act on it

5.    Link To Accountabilities

All of this work will amount to nothing unless ultimately there is accountability for the firms results and hence accountability for the sales metrics that indicate progress towards revenue.  The buck needs to stop with someone for ensuring there are sufficient opportunities in the pipeline or for improving opportunity conversion rates.  It is vital that firm leadership buys into the sales pipeline process and assigns accountability for sales results and the related sales metrics.   To make this stick, firm leaders may need to build sales metrics into the performance objectives and performance evaluation of practice leaders and individual partners.

Finally, remember that keeping score is something CPA’s intuitively understand.  Use this fact to your advantage by using sales pipeline metrics to engage practice professionals in underlying sales pipeline activities.

I believe that for professional services firms (PSF’s) to achieve sustained growth they need, just like in any other industry, a deep understanding of their competition.  We also believe that this is a significant blind spot for PSF’s - one that we are focused on helping our clients address.

If you are like a lot of firms your competitor knowledge may not go much beyond an ad hoc list of competitors and some anecdotes about their practice strengths or recent wins.  If that’s the case, the following list of questions might help you start to gather and organize what you know - and what you don’t know - about your competition.

1. Who are our competitors?
2. Who might be our next competitors?
3. What are our competitors points of differentiation?
4. How are our competitors marketing their services?
5. What’s our win/loss performance against our key competitors (and why)?
6. Which areas are our competitors focused on growing?
7. What significant moves have our competitors made in terms of new practice areas, client groups or markets?
8. Who and how are our competitors recruiting?
9. Which alliances or partners do our competitors work with to enhance their marketing or delivery capabilities?
10. How does our competitors financial performance compare to our own?

We’ll look at some of these questions in more detail going forward - both in terms of what’s involved in answering the question and what you do with your answers.

Does your firm have detailed answers to all these questions - and if not, where are your blind-spots?

Just to be clear I am considering new markets to be either geographic, service/practice area, or client type/industry.

In my experience PSF market entry approaches seems to fall into three, not necessarily mutually exclusive, categories which I’ll call accidental, incremental and strategic.

• Accidental is when the firm wakes up one day and realizes “hey we seem to have ended up with a bunch of clients in the cleantech space” or “we have a lot of clients asking us for assistance with setting up employee Health Savings Accounts” - perhaps we should focus on this market.
• Incremental is when the firm, has an instinct or some data that suggests a particular market might be attractive and decides to dip its toe in the water, perhaps by allowing a partner to devote a percentage of their time to targeting the market.
• Strategic is when the firm makes a clear decision, backed up by significant investment of resources (and hopefully a business plan) to enter a market.

I’m curious as to which of these categories is the most common in professional services. My experience suggests that accidental and incremental approaches predominate and that strategic approaches are rarer (perhaps because they selectively follow accidental or incremental starts to market entry). I also suspect that strategic approaches are most common with geographic market entry since it’s difficult to accidentally or incrementally target a new country or city hundreds of miles away. Conversely its often relatively easily to dip your toe into a new service line or industry, particularly if they are adjacent to existing practice areas.

I’m also pondering whether any of these approaches is inherently better. We might assume that strategic approaches are the way to go and that any relative lack of strategic approaches in professional services reflects the low risk and low investment appetite of the firms. But there are plenty of examples in other industries of accidental and incremental market creation (think text messaging in the mobile industry for example) and innovation experience (see Google) shows that rapid testing and development of new ideas can often be better than grand strategic designs.

What do you think? Is one approach more common than the other? Is one approach better than the other?

Applying this thinking to professional services isn’t difficult - a client that needs an audit, might also need tax compliance, a client that needs acquisition due diligence might later need post merger integration support. But just because some of these related services are obvious doesn’t guarantee that they are offered to clients.  And not all recommendations may be intuitively obvious.  Just as customers who bought Neil Diamond’s latest CD also bought Mariah Carey’s latest CD (it’s true - I just looked it up on Amazon) so might clients that used your IP attorneys also use your employment attorneys.

One of the challenges in professional services firms is cross-selling, getting folks in one practice to promote to the services of another practice area.  Amazon and Netflix have the advantage that their recommendation engine is a piece of software - free of the individual motivations and organizational barriers that can hamper referrals inside a firm.  Firms that have embraced key account management or cross-functional client service teams are likely doing a better job of this than most - but how many firms are leaving revenue on the table through the absence of an effective recommendation engine.

I have no doubt that there would be a powerful ROI in giving someone the responsibility for mining data on the range of services that specific clients buy and actively working with client relationship leads to make clients aware of how the firm has served clients with similar profiles and needs.

It’s great that professional services firms are producing and sharing so much of their insights and expertise as part of their relationship development activity. But it also presents a significant challenge.

An executive at the kind of business these firms are serving or targeting might easily have a relationship with 5-10 of these firms (a couple of CPA firms, a couple of law firms and some consulting firms). Hence that executive might be on the receiving end of multiple communications per day (although the number will be lower if firms with diverse practice or industry sets do a good job of targeting their communications).

With executives hard pressed to deal with their day to day workload and suffering from information overload it’s critical that firms develop and deliver collateral and/or events that are:

1. Highly focused and relevant to a clients issues and concerns
2. Providing valuable and preferably action oriented insights
3. Differentiated from the communications of other firms
4. Delivered in the way the client most prefers to receive it
5. Accessible at a later point in time when a client’s changing needs match the firms insight

You can use these criteria to develop your own “production checklist” which will need to include answers to the implicit questions such as “what are our clients key issues” or “what have our competitors said on this issue”.

Rigorous use of the checklist should result in increased ROI on marketing communications activity.

* Our research tracks all firm marketing activity that provides news, insights and expertise to current and prospective clients. This includes articles, newsletters, briefing papers, surveys, research studies, white papers, webcasts, conference speaking, media quotes and coverage, press releases, podcasts, blog entries and more.

I plan to share my thoughts and opinions on the trends and issues shaping the professional services industry (primarily law, consulting, accounting and technology services).

“The Big Sky View” name comes from the fact that I now live in Montana - Big Sky Country - and that I hope to blend some big picture perspectives and blue sky thinking, with some clear views on the future of professional services.

Here’s The Big Sky View from my office at 5pm Friday…….

I hope you enjoy reading The Big Sky View and look forward to hearing from you.

P.S. - My old blog was the Chief Innovation Officer and you can still read the archive posts from that blog by selecting the “Chief Innovation Office Archive” category in the left hand column of this blog.

In April, I co-authored, with Dr. Teresa Beed of the University of Montana, an article in the Journal of Accountancy on the importance of a Firms website and broader online activities to its recruiting and retention efforts.

You can read the article here.

So to get things re-booted, so to speak, have you noticed how some pretty major mainstream product and service businesses are starting to talk like professional services firms? Take the recent “Upside” campaign by Marsh and the UPS “Delivering Insight” adverts in the Wall Street Journal which feature material on topics such as:

• The Venture Capital Tangle — Start-Ups’ Rapid Evolution Creates Conflicts for Financiers

• Will the benefits of doing business in China outweigh the risks?

• How can you build a more resilient supply chain?

• Managing Growth Through Innovative Strategies

They sound more like something you’d expect to read in the McKinsey Quarterly or an Accenture whitepaper.

IT vendors have recognized and pursued “thought leadership” marketing campaigns (with varying levels of quality and success) for a number of years and now it appears that other industries are recognizing the need to demonstrate they understand, anticipate and can solve their customers “business problems”. It seems everyone is a solution provider now.

The battle for client mindshare just got a lot harder for professional services firms!

“Ask your clients what they are buying from you. If they answer “time,” then by all means continue to sell it. If they answer something else (and it will be something else), learn to sell that instead.”

Enough said.